Why is the High Shipping Cost One of the Biggest Killer of Every E-commerce Business and How Amazon FBA Can Solve this

Are you running an E-commerce business and wondering why the shipping is so high?   Here are the main reasons:

  1. Vast Geographical Size: Canada is the second-largest country in the world by land area. Shipping across such a vast territory often leads to higher costs due to long distances and transportation challenges, especially when delivering to remote or rural areas.

  2. Limited Population Density: Despite its size, Canada has a relatively small population density in many regions. This lack of concentration can make it more expensive to reach customers in certain areas, as carriers might have to travel further for deliveries, increasing shipping costs.

  3. Seasonal Challenges: Extreme weather conditions, especially during winter, can disrupt shipping schedules and logistics. Snowstorms and cold temperatures can lead to delays and increased costs for maintaining delivery schedules, particularly in northern regions.

  4. Carrier Costs: Shipping carriers may charge higher rates for deliveries within Canada, especially for expedited or express services. The limited number of major carriers in certain areas can also result in a lack of competition, contributing to higher shipping costs.

  5. Customs and Duties: Cross-border shipments, particularly from international suppliers, may incur customs duties and taxes, adding to the overall shipping expenses. Navigating customs processes and handling fees can be complex and costly.

  6. Infrastructure Challenges: Some remote areas in Canada lack proper transportation infrastructure, leading to logistical difficulties and increased shipping costs for e-commerce businesses trying to reach customers in these locations.

  7. Returns and Exchanges: Managing returns and exchanges across vast distances in Canada can be expensive due to shipping fees. Customers may be located far from return centers, leading to increased costs for e-commerce businesses.

To deal with these problems, online businesses can:

  • Talk to Shipping Companies: Negotiate deals with delivery companies to get better prices for sending packages.

  • Use Different Warehouses: Have warehouses in different parts of Canada to send things from closer places, making shipping faster and cheaper.

  • Manage Stock Better: Keep track of how much stuff is in different places to avoid sending things unnecessarily, which saves money on shipping.

  • Tell Customers Clearly: Let customers know how much shipping costs and how long it will take. This helps them understand and reduces problems.

  • Use Technology: Use special software to track packages and plan the best ways to send them, which makes things faster and cheaper.

To make shipping easier and cheaper in Canada, businesses need to plan smartly, use technology, and understand the challenges of sending things across the country.

Amazon FBA (Fulfillment by Amazon) can help reduce high shipping costs for e-commerce businesses in several ways:

  1. Bulk Shipping Rates: Amazon, due to its large scale, negotiates discounted shipping rates with carriers. E-commerce businesses using Amazon FBA can benefit from these reduced shipping costs for sending their products to Amazon's fulfillment centers.

  2. Prime Shipping Benefits: Amazon Prime offers fast and often free shipping for eligible products. By using FBA, your products become Prime eligible, allowing customers to enjoy the perks of free or reduced-cost shipping, attracting more sales.

  3. Multi-channel Fulfillment: Amazon FBA provides multi-channel fulfillment services, allowing businesses to fulfill orders not only from Amazon but also from other sales channels like their own website or other marketplaces. This can streamline shipping processes and possibly reduce shipping expenses for all sales channels.

  4. Storage and Handling Costs: Amazon charges fees for storing and handling your inventory, but these costs can be more cost-effective compared to maintaining your own warehouses. This can be especially true if your business deals with fluctuating inventory levels or seasonal sales.

  5. Access to Amazon's Network: Amazon has a widespread fulfillment network with numerous warehouses across different regions. This means your products can be stored closer to customers, reducing the distance and cost of shipping.

  6. Streamlined Logistics: Amazon's sophisticated logistics system helps in optimizing the shipping process, reducing transit times, and potentially decreasing shipping costs through efficient routing and delivery.

  7. Customer Service and Returns: FBA includes customer service and returns handling. Amazon manages customer inquiries and returns, saving businesses time and resources.

  8. Global Expansion: Amazon FBA also supports international shipping, allowing businesses to reach customers in various countries without significant upfront investment in infrastructure.

By leveraging Amazon FBA, e-commerce businesses can benefit from Amazon's extensive logistics infrastructure, reduced shipping rates, faster delivery times, and improved customer service, all of which collectively contribute to lowering overall shipping costs and enhancing the customer experience.

November 27, 2023 - Reading time: 6 minutes